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Deutsche Post launched the Digital Mail Service “E-Postbrief”: Expensive pricing and lack of legal certainty at first sight, but well planned out in the end.

Deutsche Post has launched their new digital mail product “E-Postbrief”. The E-Postbrief can be a 100% digital letter, if sender and recipient do have registered accounts. A hybrid mail solution takes place if the recipient has no registered account: In this case Deutsche Post will print the digitally submitted letter and deliver it as regular paper mail to the recipient.

In February 2010 the German Federal Network Agency approved a rate of 46 Euro cents for hybrid letter mail. In today’s announcement Deutsche Post set a price of 55 Euro cents for the E-Postbrief. Users can choose whether their letter will be delivered electronically to another “E-Postbrief” account or be printed out by Deutsche Post and delivered by the mail carrier. The price remains the same in each case. Deutsche Post is also running a sweep stake (10 Smart cars, electric bicycles, laptops) to drive customer acquisition.

The German newspaper “Frankfurter Rundschau” (FR) reported that the Deutsche Post “E-Postbrief” is not yet ensuring 100% legal compliance due to some pending legislation (Bürgerportalgesetz). Jürgen Gerdes, head of Deutsche Post Mail Division, said that “the E-Postbrief is a secure product, but not legally secure”. Nevertheless, Deutsche Post has now launched this service in order to get ahead of competitor De-Mail. The competing De-Mail project has started to sign up new customers last week. However, De-Mail will not start the service until the pending legislation “Bürgerportalgesetz” is finalized, which is expected around spring of 2011. Once enacted, the “Bürgerportalgesetz” ensures that E-Postbrief and De-Mail are legally secure and binding. Deutsche Post affirms that the E-Postbrief is synchronized with the developing legislation, and that it will be certified. Although Deutsche Post claims to fulfill the stipulations of relevant laws, some warnings have been issued, saying that the E-Postbrief does currently not provide a digital signature able to satisfy digital signature laws.

Deutsche Post charges 55 Euro cents for a conventional paper-based first class letter. Therefore the equally priced E-Postbrief will likely see a slow acceptance rate at first. Slow growth is certainly desirable from a technical point of view. It allows the freshly commissioned E-Postbrief platform to mature in a much safer fashion as would be the case with a fast growing system.

Competitor De-Mail is expected to set prices between 10 and 20 Euro cents per digital secure mail. United Internet is already accepting registrations for De-Mail, plus it is offering hybrid letters for 54 Euro cents.

Once the “Bürgerportalgesetz” has been enacted and De-Mail starts to compete with the E-Postbrief, we will see prices drop, followed by a “rapid” growth of the user base. At this point, Deutsche Post will have an advantage over De-Mail, since the Deutsche Post E-Postbrief platform had time to mature in a life environment, which also allowed for some testing of scalability. De-Mail, on the other hand, may have to take a plunge into cold waters by facing a rapid growing user base with little tested technology. The Local reported that Reinhard Clemens, head of T-Systems (Deutsche Telekom’s IT division), estimated up to 10 billion letters currently being sent by post each year could be switched to De-Mail. In prior test trials, De-Mail was only serving 812 users. Although the German ministry for internal affairs called this very limited test a success, to Postal Sanity it sounds more like a recipe for disaster. The “soft-commissioning” strategy of Deutsche Post is much more appealing from a technical point of view. And from a strategic point of view, Deutsche Post is positioning itself well to take a bite out of De-Mail.